JAIIB PPB Important Topics 2026 — High-Yield Topics, Key Facts & What Gets Asked Most
PPB (Principles & Practices of Banking) is the highest-failure JAIIB paper because candidates spread their preparation equally across all six modules instead of concentrating on the topics that IIBF actually tests. This page maps every high-yield topic, gives the exact facts and numbers you need to memorise, and tells you what is tested as a case-study versus a direct recall question.
Topic Priority Map — Where Your Marks Come From
| Topic | ~MCQs | Case-study? | Study first? |
|---|---|---|---|
| KYC / AML / PMLA | 12–18 | Yes — heavy | 🔴 Week 1 |
| NPA Classification & Provisioning | 8–12 | Yes — moderate | 🔴 Week 1 |
| Negotiable Instruments Act 1881 | 10–14 | Yes — heavy | 🔴 Week 1 |
| Banker-Customer Relationship | 8–10 | Yes — moderate | 🔴 Week 2 |
| SARFAESI Act 2002 & Recovery | 6–8 | Yes — moderate | 🔴 Week 2 |
| Types of Charges on Securities | 5–8 | Some | 🟡 Week 2 |
| Priority Sector Lending | 4–6 | Rare | 🟡 Week 2 |
| Indian Banking System / RBI | 8–12 | Rare | 🟡 Week 3 |
| Accounts: NRE / NRO / FCNR / Types | 4–6 | Rare | 🟡 Week 3 |
| Banking Technology (CBS, cyber security) | 6–8 | Some | ⚪ Week 3 |
| Ethics, Marketing, HR (Modules D & E) | 8–12 | No | ⚪ Skim only |
1. KYC / AML / PMLA — Most Important PPB Topic
KYC and anti-money laundering consistently generates the most MCQs in PPB. Expect 12–18 questions including 6–8 case-study scenarios. Every number and threshold below has appeared in past JAIIB exams.
| Concept | Exact Rule / Number |
|---|---|
| Officially Valid Documents (OVDs) | Aadhaar · PAN · Voter ID · Passport · Driving Licence · NREGA job card (State Govt signed) |
| PAN / Form 60 threshold | Cash transactions ≥ ₹50,000 — PAN compulsory; Form 60 if no PAN |
| Cash Transaction Report (CTR) | Cash ≥ ₹10 lakh (single or aggregated in a month) → filed with FIU-IND monthly |
| Suspicious Transaction Report (STR) | Filed with FIU-IND within 7 working days of becoming aware of suspicion |
| CDD (Customer Due Diligence) | Standard KYC for normal-risk customers at account opening and periodically thereafter |
| EDD (Enhanced Due Diligence) | For high-risk customers: PEPs, NRIs from high-risk countries, large cash-based businesses |
| PEP (Politically Exposed Person) | Senior public officials (politicians, judiciary, military, senior bureaucrats) & their families/associates |
| Beneficial Owner (BO) threshold | Company: ≥25% shareholding; Partnership: ≥25% capital/profit share; Trust: beneficiary with ≥25% interest |
| KYC periodicity — high risk | Re-KYC every 2 years |
| KYC periodicity — medium risk | Re-KYC every 8 years |
| KYC periodicity — low risk | Re-KYC every 10 years |
| Video KYC (V-CIP) | Permitted for resident individuals — live video interaction with bank official + OVD display |
| PMLA Act | Prevention of Money Laundering Act 2002; FIU-IND under Ministry of Finance is the nodal agency |
| Money laundering stages | Placement (dirty cash enters system) → Layering (disguise trail) → Integration (clean funds re-enter economy) |
2. Negotiable Instruments Act 1881 — Second Highest Topic
The NI Act generates 10–14 MCQs, majority as case studies. The three instruments, crossing types, endorsement types, and Section 138 are the four sub-topics that together account for almost all NI Act marks.
| Instrument | Key Definition Points | Parties |
|---|---|---|
| Cheque | Bill of Exchange drawn on a specified banker; payable on demand only; valid 3 months | Drawer · Drawee (bank) · Payee |
| Bill of Exchange | Unconditional order in writing to pay a certain sum; can be time-based (usance bill) | Drawer · Drawee · Payee |
| Promissory Note | Unconditional promise in writing to pay a certain sum; cannot be drawn on a bank | Maker · Payee (2 parties only) |
| Crossing Type | What it means | Transferable? |
|---|---|---|
| General Crossing | Two parallel transverse lines (with or without words); payable only through a bank account | Yes |
| Special Crossing | Name of a specific bank between the lines; payable only through that named bank | Yes |
| Account Payee Crossing | “A/c Payee” between the lines; restrictive — must be credited only to named payee’s account | No — endorsement ineffective |
| Endorsement Type | Description |
|---|---|
| Blank (General) | Endorser signs only — converts to bearer instrument; anyone can encash |
| Full (Special) | “Pay to [name]” + signature — only the named person can encash |
| Restrictive | “Pay to [name] only” — prohibits further negotiation |
| Conditional / Qualified | Limits endorser’s liability or adds a condition (e.g., “sans recours” = without recourse) |
| Partial — INVALID | Endorsement of only part of the amount — not valid under NI Act |
3. NPA Classification and Provisioning
NPA questions are split equally between direct recall (exact provisioning percentages) and case-study scenarios (classify an account given specific days-overdue facts). You must know both layers.
| Classification | Condition | Secured provision | Unsecured provision |
|---|---|---|---|
| Standard Asset | No overdues; regular accounts | 0.25–1% (general) | — |
| Sub-Standard | NPA for ≤ 12 months (90+ days overdue) | 15% | 25% |
| Doubtful — D1 | NPA for 12–24 months | 25% | 100% |
| Doubtful — D2 | NPA for 24–36 months | 40% | 100% |
| Doubtful — D3 | NPA for > 36 months | 100% | 100% |
| Loss Asset | Identified by bank/auditor/RBI as uncollectable | 100% | 100% |
• Term loans: instalment/interest overdue for > 90 days
• Overdraft / Cash Credit: account out of order for > 90 days (balance continuously exceeds sanctioned limit, or no credits for 90 days, or credits insufficient to cover interest)
• Agricultural loans: short-term crop loans — 2 crop seasons overdue; long-term — 1 crop season overdue
• Promise of future payment does NOT stop NPA classification — tested repeatedly as case-study
4. SARFAESI Act 2002 and Recovery Mechanisms
| Recovery Route | Applicable Loan Amount | Key Rule |
|---|---|---|
| Lok Adalat | Up to ₹20 lakh | Compromise settlement; award is binding; no appeal allowed |
| DRT (Debt Recovery Tribunal) | Above ₹20 lakh | Recovery of Debts and Bankruptcy Act 1993; appeal to DRAT within 30 days |
| SARFAESI Act 2002 | ≥ ₹1 lakh (secured) | No court needed; 60-day notice → possession → sale; NOT for agricultural land |
| IBC 2016 (Insolvency) | Default ≥ ₹1 crore (corp.) | NCLT process; 180 days CIRP + 90-day extension; resolution or liquidation |
1. Minimum secured loan: ₹1 lakh
2. Demand notice period: 60 days (borrower can repay within 60 days)
3. After possession, bank must sell within 30 days of public notice (total 30+30 days)
4. Cannot be used for agricultural land
5. Borrower can appeal to DRT within 45 days of SARFAESI notice
5. Banker-Customer Relationship
| Context | Bank is… | Customer is… |
|---|---|---|
| Accepting deposits | Debtor | Creditor |
| Granting loans | Creditor | Debtor |
| Safe custody of valuables | Bailee | Bailor |
| Safe deposit locker | Lessor / Licensor | Lessee / Licensee |
| Collecting cheques | Agent | Principal |
| Executing standing orders | Agent | Principal |
| Purchasing/selling securities for customer | Trustee / Agent | Beneficiary / Principal |
• Right of General Lien — bank can retain customer’s goods in its possession until all dues are paid (not a specific pledge; applies to all outstanding dues)
• Right of Set-Off — bank can set off credit balance in one account against debit balance in another account of the same customer (requires same customer, mature debt, and notice)
• Right of Appropriation — when customer pays, bank can appropriate to any lawful debt (oldest first, unless customer specifies) under Clayton’s Rule
• Right to Charge Interest — bank can charge interest and compound it as per agreed terms
• 4 exceptions to secrecy duty: statutory obligation (court/IT department) · banker’s duty to public · bank’s interest · customer’s consent
6. Types of Charges on Securities (Lending)
5–8 MCQs per attempt. Direct recall — know the definition and key feature that distinguishes each charge type.
| Charge Type | Possession transfers? | Used for | Key distinguishing fact |
|---|---|---|---|
| Pledge | Yes — to bank | Movable goods, gold, shares | Bank (pledgee) takes actual possession. Borrower (pledgor) retains ownership. Bank can sell on default. |
| Hypothecation | No — stays with borrower | Stock, WIP, book debts, vehicles | Possession AND ownership with borrower. Bank has equitable charge. Used for cash credit/OD against stock. |
| Mortgage | Usually No (Simple) | Immovable property (land, buildings) | Transfer of interest in property as security. English mortgage: possession to lender. Simple mortgage: no transfer of possession. |
| Assignment | Yes — rights transfer | Life insurance policies, book debts, receivables | Borrower assigns (transfers) the right to receive future payments to the bank as security. |
| Lien | Yes — bank retains | Goods, documents, securities already in bank’s possession | Right to retain property until dues paid. No right to sell (except banker’s lien — deemed pledge). |
7. Priority Sector Lending — Key Targets
| Category | Target (% of ANBC) | Note |
|---|---|---|
| Total PSL | 40% | Domestic commercial banks and foreign banks (>20 branches) |
| Agriculture | 18% | Of which 10% to small/marginal farmers |
| Micro Enterprises (within MSME) | 7.5% | Sub-target within total PSL |
| Weaker Sections | 12% | SC/ST, women, minority communities, SHGs etc. |
| Shortfall — consequence | RIDF / SEDF | Bank must deposit shortfall in Rural Infrastructure Development Fund (RIDF) with NABARD at lower interest |
8. Account Types — NRE, NRO, FCNR
| Account | Currency | Repatriable? | Interest taxable in India? |
|---|---|---|---|
| NRE (Non-Resident External) | INR | Yes — fully | No — exempt |
| NRO (Non-Resident Ordinary) | INR | Restricted (up to $1 million/year) | Yes — taxable |
| FCNR(B) (Foreign Currency Non-Resident) | Foreign currency (USD, GBP, EUR etc.) | Yes — fully | No — exempt |
9. Other High-Yield Facts to Memorise
| Topic | Key Fact |
|---|---|
| DICGC insurance limit | ₹5 lakh per depositor per bank (raised from ₹1 lakh on 4 Feb 2020) |
| Payment Bank — deposit limit | Maximum ₹2 lakh per account; cannot grant loans or issue credit cards |
| Small Finance Bank — min capital | ₹200 crore paid-up capital; must lend 75% to PSL targets |
| Garnishee Order | Court order attaching funds in customer’s bank account to satisfy creditor’s decree; bank must comply; overdraft accounts NOT attachable |
| Insolvency — account operation | Bank must stop all transactions when it receives notice of customer’s insolvency; cheques signed before insolvency but presented after = return |
| Death of customer | Bank must stop operations on receiving notice of death; pays to legal heirs / nominees; cheques signed before death can be paid if presented before bank receives notice |
| Letter of Credit (LC) | Revocable LC: can be cancelled any time without notice. Irrevocable LC: cannot be cancelled without all party consent. Confirmed LC: issuing bank + confirming bank both guarantee. UCPDC 600 governs LCs. |
| Bank Guarantee | Financial guarantee (payment) vs Performance guarantee (contract fulfilment). Bank liable on first demand if guarantee is unconditional. Not governed by NI Act — governed by Indian Contract Act. |
| Consumer Forum — banking | District Consumer Forum: up to ₹50 lakh. State Consumer Commission: ₹50 lakh–₹2 crore. National Commission: above ₹2 crore. |
| RBI Integrated Ombudsman Scheme | Complaints against banks; RBI Ombudsman can award compensation up to ₹20 lakh; free to customer; complaint first to bank (wait 30 days or unsatisfied response) |
| CIBIL / Credit Bureau | Credit score 300–900; above 750 = good credit; banks report defaults monthly; customer can dispute errors |
| CGTMSE guarantee coverage | Covers micro/small enterprises up to ₹5 crore; collateral-free loans; annual guarantee fee payable by bank |
| Phishing / Vishing | Phishing = fake emails/websites. Vishing = fake phone calls. Smishing = fake SMS. Bank liability only if bank’s system is compromised; customer negligence reduces bank liability. |
| Banking Regulation Act 1949 — Section 5(b) | Definition of “banking” — accepting deposits for the purpose of lending or investment. Core definitional question in Module A. |
What to Practise vs What to Memorise
- KYC scenarios — what to do with a high-risk customer
- NI Act — can this cheque be paid? Can this endorsement pass title?
- NPA — is this account an NPA? What category?
- SARFAESI — can the bank take possession? What step comes next?
- Banker-customer — what right does the bank have in this situation?
- Charges on security — which charge was created here?
- NPA provisioning percentages (D1=25%, D2=40%, D3=100%)
- KYC thresholds: ₹50,000 (PAN), ₹10 lakh (CTR), 7 days (STR)
- SARFAESI: ₹1 lakh minimum, 60-day notice
- DRT jurisdiction: above ₹20 lakh
- DICGC: ₹5 lakh per depositor
- Section 138: 2 years imprisonment / 2× fine
- PSL targets: 40% total, 18% agri, 7.5% micro, 12% weaker sections
- KYC periodicity: 2/8/10 years (high/medium/low risk)
Which is the most important topic in JAIIB PPB 2026?
KYC/AML is the single most important topic in JAIIB PPB, generating 12–18 MCQs including 6–8 case-study scenarios per attempt. After KYC, the Negotiable Instruments Act (10–14 MCQs) and NPA Classification with SARFAESI (10–14 combined MCQs) are the next highest. Together, these three areas account for approximately 35–45 marks out of 100. Master them before studying anything else.
What are the NPA classification stages in JAIIB PPB?
Under RBI norms, a loan overdue for more than 90 days becomes an NPA. The four stages: Sub-Standard — NPA for up to 12 months (provision: 15% secured, 25% unsecured). Doubtful D1 — NPA for 12–24 months (25% secured, 100% unsecured). Doubtful D2 — NPA for 24–36 months (40% secured, 100% unsecured). Doubtful D3 — NPA for more than 36 months (100% both). Loss Asset — identified as uncollectable by bank, auditor, or RBI (100% provision). Agricultural loans: short-term crop loans become NPA after 2 crop seasons of default; long-term after 1 crop season.
What is the difference between pledge, hypothecation and mortgage?
Pledge: possession of movable goods transfers to the bank; ownership stays with borrower. Used for gold, shares, goods in warehouse. Hypothecation: neither possession nor ownership transfers; bank has an equitable charge on movable assets like stock-in-trade or vehicles. Used for cash credit and overdraft against stock. Mortgage: creates a charge on immovable property (land, buildings). In a simple mortgage, no possession transfer; in an English mortgage, possession transfers to the lender. Assignment: borrower transfers rights to receive future payments (e.g., LIC policy proceeds, receivables) to the bank.
What are the OVDs for KYC in JAIIB PPB?
Officially Valid Documents (OVDs) for KYC under RBI Master Direction: (1) Aadhaar card issued by UIDAI, (2) PAN card, (3) Voter Identity Card issued by Election Commission, (4) Passport, (5) Driving Licence, (6) NREGA job card signed by a State Government officer. For cash transactions of Rs. 50,000 or more, PAN is mandatory; if the customer does not have PAN, Form 60 must be submitted. Cash transactions of Rs. 10 lakh or more must be reported to FIU-IND as Cash Transaction Reports monthly.
What is the SARFAESI Act process in JAIIB PPB?
SARFAESI Act 2002 allows banks to recover secured NPAs of Rs. 1 lakh or more without going to court. Process: (1) Classify as NPA. (2) Issue a 60-day demand notice to the borrower. (3) If borrower does not repay within 60 days, bank can take symbolic or physical possession of the secured asset. (4) Bank must issue a 30-day public notice before sale. (5) Bank can then sell the asset by public auction or private treaty. Important restrictions: SARFAESI cannot be used for agricultural land. Borrower can challenge the notice in DRT within 45 days.
How is a cheque different from a promissory note?
A cheque is a Bill of Exchange drawn on a specified bank, payable on demand only, and is always drawn on a bank. It involves three parties: drawer, drawee (bank), and payee. A cheque is valid for 3 months. A Promissory Note is an unconditional promise in writing by the maker to pay a certain sum to the payee. It involves only two parties (maker and payee) and cannot be drawn on a bank. There is no drawee in a promissory note. Section 138 (criminal liability for dishonour) applies only to cheques, not promissory notes.
What is the banker’s right of set-off and when can it be exercised?
The right of set-off allows a bank to set off a credit balance in a customer’s account against a debit balance (debt owed to the bank) in another account of the same customer. Conditions for exercising set-off: (1) Both accounts must be in the same customer’s name — cannot combine joint accounts with individual accounts. (2) The debt must be certain, ascertained, and presently payable (not future or contingent). (3) The bank must give notice to the customer before exercising set-off. It differs from the right of lien, which is the right to retain property — not to apply a credit balance against a debt.
For 100 practice questions on all these topics, go to JAIIB PPB MCQ Practice Questions →. For the full PPB paper guide with a 4-week study plan, see the JAIIB PPB Paper Guide →. For the complete JAIIB hub, visit JAIIB 2026 →.